SEC Filing—Ultragenyx Pharmaceutical Inc.

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to .

Commission File No. 001-36276

ULTRAGENYX PHARMACEUTICAL INC.

(Exact name of registrant as specified in its charter)


Delaware			27-2546083
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


60 Leveroni Court Novato, California		94949
(Address of principal executive offices)		(Zip Code)

(415) 483-8800

(Registrant’s telephone number, including area code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.001 par value	RARE	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 30, 2023, the registrant had 82,114,350 shares of common stock issued and outstanding.

ULTRAGENYX PHARMACEUTICAL INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2023

INDEX


			Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			1

Part I –	Financial Information

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets	3

		Condensed Consolidated Statements of Operations	4

		Condensed Consolidated Statements of Comprehensive Loss	5

		Condensed Consolidated Statements of Stockholders’ Equity	6

		Condensed Consolidated Statements of Cash Flows	8

		Notes to Condensed Consolidated Financial Statements	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

	Item 4.	Controls and Procedures	35

Part II –	Other Information

	Item 1.	Legal Proceedings	36

	Item 1A.	Risk Factors	36

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	72

	Item 3.	Defaults Upon Senior Securities	72

	Item 4.	Mine Safety Disclosures	72

	Item 5.	Other Information	72

	Item 6.	Exhibits	73

	Signatures		74

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or the Quarterly Report, contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words, or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•

our commercialization, marketing, and manufacturing capabilities and strategy;

•

our expectations regarding the timing of clinical study commencements and reporting results from same;

•

the timing and likelihood of regulatory approvals for our product candidates;

•

the anticipated indications for our product candidates, if approved;

•

the potential market opportunities for commercializing our products and product candidates;

•

our expectations regarding the potential market size and the size of the patient populations for our products and product candidates, if approved for commercial use;

•

estimates of our expenses, revenue, capital requirements, and our needs for additional financing;

•

our ability to develop, acquire, and advance product candidates into, and successfully complete, clinical studies;

•

the implementation of our business model and strategic plans for our business, products and product candidates and the integration and performance of any businesses we have acquired or may acquire;

•

the initiation, timing, progress, and results of ongoing and future preclinical and clinical studies, and our research and development programs;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our products and product candidates;

•

our ability to maintain and establish collaborations or strategic relationships or obtain additional funding;

•

our ability to maintain and establish relationships with third parties, such as contract research organizations, contract manufacturing organizations, suppliers, and distributors;

•

our financial performance and the expansion of our organization;

•

our ability to obtain supply of our products and product candidates;

•

the scalability and commercial viability of our manufacturing methods and processes;

•

developments and projections relating to our competitors and our industry;

•

stagnating or worsening business and economic conditions and increasing geopolitical instability, including inflationary pressures, general economic slowdown or a recession, rising interest rates, foreign exchange rate volatility, financial institution instability, and changes in monetary policy; and

•

other risks and uncertainties, including those listed under Part II, Item 1A. Risk Factors.

Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those discussed under Part II, Item 1A. Risk Factors and elsewhere in this Quarterly Report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report also contains estimates, projections, and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained such industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, and similar sources.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share amounts)


	September 30,			December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	72,575		$	132,944
Marketable debt securities		369,519			614,818
Accounts receivable, net		79,263			40,445
Inventory		31,802			26,766
Prepaid expenses and other current assets		46,029			68,926
Total current assets		599,188			883,899
Property, plant, and equipment, net		296,811			259,726
Equity investments		4,039			5,531
Marketable debt securities		82,071			148,970
Right-of-use assets		26,427			25,961
Intangible assets, net		157,302			160,105
Goodwill		44,406			44,406
Other assets		27,896			16,846
Total assets	$	1,238,140		$	1,545,444
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	33,357		$	43,274
Accrued liabilities		178,622			204,678
Contract liabilities		—			1,479
Lease liabilities		12,067			11,779
Liabilities for sales of future royalties		29,932			—
Total current liabilities		253,978			261,210
Lease liabilities		34,555			19,814
Deferred tax liabilities		31,667			31,667
Liabilities for sales of future royalties		875,996			875,439
Other liabilities		10,230			4,820
Total liabilities		1,206,426			1,192,950
Stockholders’ equity:
Preferred stock — 25,000,000 shares authorized; nil outstanding as of September 30, 2023 and December 31, 2022		—			—
Common stock — 250,000,000 shares authorized; 72,174,307 and 70,197,297 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		72			70
Treasury stock, at cost, 8,444 and nil shares held as of September 30, 2023 and December 31, 2022, respectively		(381	)		—
Deferred compensation obligation		381			—
Additional paid-in capital		3,298,357			3,140,019
Accumulated other comprehensive loss		(2,244	)		(6,573	)
Accumulated deficit		(3,264,471	)		(2,781,022	)
Total stockholders’ equity		31,714			352,494
Total liabilities and stockholders’ equity	$	1,238,140		$	1,545,444

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues:
Product sales	$	42,349		$	32,503		$	128,757		$	90,019
Royalty revenue		55,703			5,373			106,916			15,634
Collaboration and license		—			52,827			71,184			154,328
Total revenues		98,052			90,703			306,857			259,981
Operating expenses:
Cost of sales		10,987			8,631			33,158			23,001
Research and development		157,245			237,297			487,892			534,981
Selling, general and administrative		74,917			69,841			232,966			205,290
Total operating expenses		243,149			315,769			754,016			763,272
Loss from operations		(145,097	)		(225,066	)		(447,159	)		(503,291	)
Interest income		5,881			3,483			18,135			4,876
Change in fair value of equity investments		(1,419	)		(1,626	)		(1,492	)		(21,139	)
Non-cash interest expense on liabilities for sales of future royalties		(17,665	)		(14,505	)		(48,676	)		(27,141	)
Other expense		(699	)		(1,105	)		(2,380	)		(1,746	)
Loss before income taxes		(158,999	)		(238,819	)		(481,572	)		(548,441	)
Provision for income taxes		(650	)		(6,287	)		(1,877	)		(7,147	)
Net loss	$	(159,649	)	$	(245,106	)	$	(483,449	)	$	(555,588	)
Net loss per share, basic and diluted	$	(2.23	)	$	(3.50	)	$	(6.81	)	$	(7.96	)
Weighted-average shares used in computing net loss per share, basic and diluted		71,664,493			70,054,173			70,987,801			69,834,037

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Net loss	$	(159,649	)	$	(245,106	)	$	(483,449	)	$	(555,588	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(249	)		(420	)		188			(1,211	)
Unrealized gain (loss) on available-for-sale securities		1,103			(888	)		4,141			(7,607	)
Other comprehensive income (loss):		854			(1,308	)		4,329			(8,818	)
Total comprehensive loss	$	(158,795	)	$	(246,414	)	$	(479,120	)	$	(564,406	)

See accompanying notes.

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share amounts)


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Treasury			Deferred Compensation		Total Stockholders'
	Shares		Amount		Capital		Income (Loss)			Deficit			Stock			Obligation		Equity
Balance as of June 30, 2023		71,465,424	$	71	$	3,236,879	$	(3,098	)	$	(3,104,822	)	$	(381	)	$	381	$	129,030
Issuance of common stock in connection with at-the-market offering, net		611,282		1		24,791		—			—			—			—		24,792
Stock-based compensation				—		36,245		—			—			—			—		36,245
Issuance of common stock under equity plan awards, net of tax		97,601		—		442		—			—			—			—		442
Other comprehensive income		—		—		—		854			—			—			—		854
Net loss		—		—		—		—			(159,649	)		—			—		(159,649	)
Balance as of September 30, 2023		72,174,307	$	72	$	3,298,357	$	(2,244	)	$	(3,264,471	)	$	(381	)	$	381	$	31,714


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Treasury			Deferred Compensation		Total Stockholders'
	Shares		Amount		Capital		Income (Loss)			Deficit			Stock			Obligation		Equity
Balance as of December 31, 2022		70,197,297	$	70	$	3,140,019	$	(6,573	)	$	(2,781,022	)	$	—		$	—	$	352,494
Issuance of common stock in connection with at-the-market offering, net		1,175,584		1		53,298		—			—			—			—		53,299
Stock-based compensation				—		100,780		—			—			—			—		100,780
Issuance of common stock under equity plan awards, net of tax		801,426		1		4,260		—			—			—			—		4,261
Deferred compensation		—		—		—		—			—			(381	)		381		—
Other comprehensive income		—		—		—		4,329			—			—			—		4,329
Net loss		—		—		—		—			(483,449	)		—			—		(483,449	)
Balance as of September 30, 2023		72,174,307	$	72	$	3,298,357	$	(2,244	)	$	(3,264,471	)	$	(381	)	$	381	$	31,714


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Treasury		Deferred Compensation		Total Stockholders'
	Shares		Amount		Capital		Income (Loss)			Deficit			Stock		Obligation		Equity
Balance as of June 30, 2022		70,010,398	$	70	$	3,071,000	$	(8,914	)	$	(2,384,083	)	$	—	$	—	$	678,073
Stock-based compensation		—		—		36,096		—			—			—		—		36,096
Issuance of common stock under equity plan awards, net of tax		69,379		—		1,074		—			—			—		—		1,074
Other comprehensive loss		—		—		—		(1,308	)		—			—		—		(1,308